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Business strategy

Sales models are changing, driven by Covid-19, with ‘outside’ selling on the endangered list

- February 9, 2021 4 MIN READ
Photo: AdobeStock
Historically most businesses have been either outside sales businesses with an army of people selling face to face, or inside sales business that sell remotely.

The idea of reaching customers remotely is nothing new. The origins of inside sales date back to the 1950s when businesses were using telemarketing.

But inside sales has evolved beyond the “one call”, do or die model. It is now a complex process that enables salespeople to connect to more prospects, form relationships and convert them over time with greater success.

Conversely, the outside sales model has been in decline for many years and even sales reps who once did all their selling face-to-face have increasingly been undertaking parts of the sales process remotely, such as following up by phone and email to close the deal.

An HBR article cites a survey in which twice as many participants reported moving to an inside model as an outside sales model. Driven by cost efficiencies, greater geographical reach across more time zones, an explosion in SaaS sales tools, changing customer preferences and changing business models, the inside sales movement seems to be unstoppable.

Rick Click Capital’s Benjamin Chong

This has left many wondering if outside sales could finally be on the way out. And in the post-COVID world, if outside sales will finally reach extinction.

Undoubtedly there’s nothing quite like a global pandemic to force change. As many countries went into lockdown, virtually all salespeople migrated to a remote “inside” model, including even those chasing large enterprise deals, traditionally sealed face-to-face.

Customers across all products and services were forced to adapt to inside sales and get comfortable with the concept of buying remotely. This had already been gaining momentum with many taking their comfort and satisfaction with online B2C shopping to making more B2B purchases online in their working day.

The buzz of online shopping has also sped the pace of B2B purchases with customers wanting their product immediately, without needing to wait a week for a meeting.

The buying process has also accelerated as customers are able to access the information they need to make a purchase at any time, in any place. B2B companies have learnt from their B2C peers about how to deliver a first-class sales experience and ensure that the right sales content is always available.

 

Cutting sales costs

In the absence of any other option during the pandemic, the forced adoption of inside sales was a huge success. People across a large number of industries welcomed the change, with both the salesperson and the customer enjoying time and cost savings.

A large number of customers now prefer remote sales, key decision makers are increasingly receptive to doing business without a face-to-face meeting, and businesses have reduced costs.

According to data from PointClear, an outside sales call costs more than six times the average inside sales call.

SaaS businesses, in particular, have thrived using inside sales and undoubtedly are built to capitalise on the benefits. The subscription models often used in these businesses allow customers to try software for free before making a larger commitment. Subscription businesses are exploding across all sectors.

On demand laundry services like the Shirt Butler, dog food and even underwear are available on a subscription service model.

For founders who are setting up their sales team, many will be wondering if outside sales has any role to play in this changing world. But outside sales is not completely dead. Yet. Many startups have, at least initially, a hybrid model that uses both inside and outside salespeople.

If sales are high value and complex, or if a product is unknown, then the personal face-to-face touch might be what is needed to get the deal over the line.

Regardless of whether a startup uses an inside or outside sales model, its chances of success rely on robust structures and processes. And only after a startup has a replicable sales process can the business scale. This means standardising certain aspects of the sales process such as playbooks, calling schedules, scripts and sharing sales metrics.

 

SaaS for smarter sales

SaaS-based technology is providing startups with more data to measure, track and optimise sales processes.

Once the process is decided, a founder will need a capable team to deliver. The most common sales team structures are islands, assembly lines and pods, which all work across both inside and outside sales models.

The autonomy of the island allows salespeople to take the tools and work with minimal oversight, but this has the downside of a lack of control and visibility by the founder.

An assembly line approach sees different tasks in the buyer journey assigned to different roles namely lead generation, sales development, account ownership and customer success. This ultimately allows a founder to quickly isolate points in the process that are preventing conversion but comes with the downside of added handover and briefing, where information can fall through the gaps.

Finally, a pod approach allows for the assembly line to be broken down into smaller cross functional teams. Its supporters claim that this model ensures greater customer care and closer collaboration within the team, however those who favour a competitive environment to fuel sales may find that this model lacks inhibits competition.

Across all structures a close relationship with the customer is integral to success in sales. Relationships do influence a sales decision but in the fast-paced world we live in, relationships may be built on a reputation for providing insights and content rather than on the golf course. And these connections will also happen quickly, usually before it is possible to schedule an expensive dinner.

Finding the most effective sales model is a process of experimentation using different techniques, measured usually by the acquisition cost. The key to optimising this process is constant iteration and evolution to create as many touchpoints with customers that maximise the opportunity to seal the deal.

 

  • Benjamin Chong is a partner at venture capital firm Right Click Capital, investors in bold and visionary tech founders.